U.S. Jewish Groups Watch With Cautious Optimism : Reaction: Leaders and lawmakers say they expect Israel to eventually accept talks. Still, there is skepticism.

WASHINGTON — As Israel and its Arab neighbors edge closer to a potentially historic peace conference, the American Jewish community is watching with intense interest--and wary optimism.

Jewish groups nationwide are sharing anxious anticipation in conference calls and are involved in animated discussions as the Israeli government weighs whether to participate in peace talks that could be a first step toward ending more than 40 years of hostilities in the Middle East, spokesmen for several organizations said Tuesday.

"There is enormous interest," said David A. Harris, executive vice president of the American Jewish Committee. "People are watching events with a healthy mixture of hope and caution."

For American Jews--long concerned about Israel's survival amid its hostile neighbors--the U.S.-driven peace process holds enormous promise as well as peril.

Defeat of Israel's most dangerous enemy--Iraq--in the Persian Gulf War, coupled with U.S.-Soviet rapprochement, has opened a window of opportunity to ease the tensions that have contributed to four previous Middle East wars.

At the same time, Israel's American allies fear that support for the Jewish state in the United States could be eroded if the peace effort ultimately fails and Israel is viewed as obstructionist.

Key Jewish leaders and members of Congress said they believe that Israeli Prime Minister Yitzhak Shamir will resolve procedural concerns and eventually agree to join in a peace conference with Syria, Saudi Arabia and other Arab states. Many noted that Israel has long sought direct bilateral negotiations--an integral part of the proposed conference.

"There is no question that most mainline American Jewish organizations have urged Shamir to respond positively," said Henry Siegman, executive director of the American Jewish Congress. "We have done so all along and most certainly have done so since Syria decided to join direct talks."

Nevertheless, many of those interviewed echoed the Israeli government's skepticism about the sincerity of Syrian President Hafez Assad, Israel's longtime foe. They noted that details of the U.S. proposal under which Assad agreed to participate in the talks remain secret.

"His deeds do not measure up to his words," said Rabbi Alexander M. Schindler, president of the Union of American Hebrew Congregations, the parent body of Reform Judaism. "He continues to support and grant safe haven to the world's most wanted terrorists. He has made no moves on American or Western hostages (held in Lebanon). And he just purchased Scuds (missiles) from North Korea and China."

Elan Steinberg of the World Jewish Congress said the group's hopes increased after its representatives obtained assurances from aides to Secretary of State James A. Baker III in Israel that no "side deal" was cut with Syria and that the United States would not pressure Israel to make additional concessions.

Several members of Congress, however, expressed concern about indications that the Bush Administration might seek to make $10 billion in loan guarantees to Israel for housing and jobs for new Soviet immigrants contingent on Israeli flexibility in the peace process.

"The suggestion that maybe the housing guarantees would be linked to Israeli actions is almost immoral," said Sen. Frank P. Lautenberg (D-N.J.), a prominent supporter of Israel. "For years, we coerced the Soviet Union to let these people go, and now they have fled the country because they are afraid for their safety and found a haven in Israel."

Rep. Lawrence J. Smith (D-Fla.), another leading pro-Israel lawmaker, said he has warned the Israeli Embassy that the Jewish state's refusal to participate in the peace talks would hurt its credibility in the United States. "If Israel says no, there's going to be some negative fallout with members of Congress," Smith said.

Even if the peace conference is convened, Israel's American allies point out, such volatile issues as the future of the Israeli-held Golan Heights, West Bank and East Jerusalem and the fate of the Palestinians remain to be resolved.